Cubic Corp. Reports Record Sales and Backlog and a 21 Percent Increase in Operating Income for the Quarter Ended March 31, 2004.Business Editors/High-Tech Writers SAN DIEGO--(BUSINESS WIRE)--May 5, 2004 San Diego-based Cubic Corp. (AMEX AMEX See: American Stock Exchange :CUB cub the newborn of a number of animal species as diverse as lion, fox and bear. ) today reported higher sales, backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the second quarter of fiscal 2004, which ended March 31. Sales for the quarter were $175 million, compared to $167 million for the same period last year, an increase of 5 percent. Operating income was $13.2 million for the quarter, compared to $10.9 million last year, a 21 percent increase, reflecting strong performance from the defense segment. Net income for the second quarter of fiscal 2004 was $8.3 million, or 31 cents a share, compared to $11.2 million, or 42 cents a share for the same quarter of the prior year. Net income in the second quarter last year included a gain from the sale of real estate of approximately $3.7 million, after applicable income taxes, which amounted to 14 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Excluding this real estate gain, net income increased 11 percent over the comparable quarter last year. Sales for the first six months of fiscal year 2004 increased by 10 percent to $346 million, compared to $316 million last year. Operating income for the period was $24.8 million, up from $21.0 million for the first six months of last year, an increase of 18 percent. For the six months ended March 31, 2004, net income was $15.8 million, or 59 cents per share, compared to $17.9 million, or 67 cents per share in 2003, which had included the 14 cent per share gain from the sale of real estate mentioned above. Excluding this real estate gain, net income increased 11 percent over the first half of last year. Total backlog increased to $1.590 billion at March 31, 2004, compared to $1.505 billion at September September: see month. 30, 2003. Defense Defense segment sales increased to $108 million in the second fiscal quarter this year from $92 million in the comparable quarter last year, a 17 percent increase. About $7 million of the increase came from the Simulation Systems Division (SSD See solid state disk. ), formerly ECC (1) (Error-Correcting Code) A type of memory that corrects errors on the fly. See ECC memory. (2) (Elliptic Curve Cryptography) A public key cryptography method that provides fast decryption and digital signature processing. International, which Cubic acquired in September 2003, with the remainder of the growth coming from previously owned businesses. For the first six months of the fiscal year, defense sales were 22 percent higher than last year, having increased to $212 million from $174 million; $14 million of this increase came from the newly acquired SSD division. Communications and Electronics and Government Services sales were up for the first six months, while Training Systems sales remained at about the same level as last year. In Training Systems, significant activity on a large new air combat training program, which the company won last year, has just begun while work on previous air combat training contracts has been winding down. The company expects this to be a short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. situation and anticipates air combat training sales will increase over the next several quarters. MILES sales also decreased in the first half from $25 million last year to $15 million this year. New orders totaling $24 million received late in the second quarter should help boost MILES sales over the next few quarters. Operating income for the defense segment in the second quarter was up this year by more than 80 percent over the same period last year, to $8.6 million from $4.8 million. The increase came from the Communications and Electronics Business Unit and the Government Services Business Unit. Operating income was higher than last year for the first six months in all three defense business units, totaling $17.3 million this year compared to $9.3 million last year. Transportation Transportation Systems sales were down for the second quarter compared to last year, from $72 million to $63 million. Second quarter sales from the PRESTIGE contract in London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. declined by nearly $20 million compared to last year, as several major milestones on the project were completed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the plan for this program. For the first six months of the fiscal year, Transportation Systems sales decreased by 6 percent, from $134 million to $126 million. Sales from the PRESTIGE project were down by nearly $30 million for the six month period. All but $8 million of this expected decrease in PRESTIGE sales was replaced by higher sales from projects in the U.S., the U.K. and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. . The company believes the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. prospects for growth in the U.K. market remain very strong as do they for the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. continent, North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and the Far East. Within the next nine months the company expects to bid on well over $1 billion in Transportation System opportunities in these regions. Operating income in the Transportation Systems segment decreased to $5.0 million in the second quarter from $6.5 million last year, and for the first six months was $9.0 million compared to $12.4 million last year. Legal and consulting fees for an arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the hearing related to a former subcontractor One who takes a portion of a contract from the principal contractor or from another subcontractor. When an individual or a company is involved in a large-scale project, a contractor is often hired to see that the work is done. on the PRESTIGE contract in London accounted for all of the decrease in the second quarter and $2.7 million of the decrease for the first six months. These legal fees are expected to continue through the end of the calendar year. Backlog Total backlog increased during the first half of the year with the increases coming from both segments. New contract awards pushed backlog up to a new all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal high for Cubic. Cubic's total backlog, including unfunded government service contract options increased to $1.590 billion at March 31, 2004, compared to $1.505 billion at September 30, 2003. Liquidity Cash flows from operations were negative for the first half of the fiscal year by $40 million due primarily to growth in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying . One cause of this growth was a defense customer payment of approximately $12 million that was due to be paid in March but wasn't was·n't Contraction of was not. wasn't was not wasn't be paid until early April for administrative reasons. Transportation Systems accounts receivable also grew because of delays in meeting payment milestones on several North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. contracts. The company expects this situation to improve in the remaining two quarters of fiscal 2004 as certain payment milestones are reached, which should trigger payments from the customers this year. If these payments are received as anticipated, positive cash flows from the transportation segment in the second half should exceed the negative cash flows experienced in the first half of the year. During the second quarter, the company finalized See finalization. arrangements for a committed short-term line of credit for $60 million. The company's short-term borrowings increased by almost $35 million during the first half of the year due to the negative operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. ; however, subsequent to the end of the quarter, cash flows have been positive, enabling the company to reduce short-term borrowings by $21 million. The Cubic Defense Applications group provides realistic combat training systems for military forces as well as simulation, force modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, , educational services, operations & maintenance and manufacturing services. The group also supplies products and systems for C4ISR C4ISR Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance C4ISR Command, Control, Communications, Computer, Intelligence, Surveillance and Reconnaissance C4ISR Command Control Communications Computers Intelligence Surveillance and Reconnaissance (Command, Control, Communications, Computers, Intelligence, Surveillance & Reconnaissance  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. ) applications, search and rescue avionics avionics (ā'vēŏn`ĭks), electronic instruments used in air or space flight; also the design and production of such instruments. Early planes had few instruments, but as aviation and aircraft became more complex, so did instrumentation. and radio communications for military and civil markets. Cubic Transportation Systems designs and manufactures automatic fare collection systems for public mass transit mass transit, public transportation systems designed to move large numbers of passengers. Types and Advantages Mass transit refers to municipal or regional public shared transportation, such as buses, streetcars, and ferries, open to all on a , including rail and buses throughout the world. For more information about Cubic, see the company's web site at www.cubic.com. In addition to historical matters, this release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. which are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995. These forward-looking statements involve predictions of future results. Investors are cautioned that forward-looking statements involve risks and uncertainties which may affect the company's business and prospects. These include the effects of politics on negotiations and business dealings with government entities, economic conditions in the various countries in which the company does or hopes to do business, competition and technology changes in the defense and transit industries, and other competitive and technological factors.
Cubic Corp.
Consolidated Condensed Balance Sheets
(in thousands)
March 31, Sept. 30,
2004 2003
(Unaudited)(See note
below)
--------------------
ASSETS
Current assets:
Cash and cash equivalents $17,560 $22,370
Marketable securities, available-for-sale -- 2,994
Accounts receivable 297,887 251,021
Inventories 29,801 24,922
Deferred income taxes and other current assets 26,262 26,963
--------------------
Total current assets 371,510 328,270
--------------------
Long-term contract receivables 41,700 29,200
Property, plant and equipment -- net 52,978 52,272
Goodwill 34,380 33,311
Other assets 18,056 17,173
--------------------
$518,624 $460,226
====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $41,552 $6,254
Trade accounts payable 16,187 25,222
Customer advances 50,205 40,422
Other current liabilities 43,835 49,594
Accrued pension liability 23,522 22,669
Income taxes payable 2,657 6,064
Current portion of long-term debt 5,743 1,429
--------------------
Total current liabilities 183,701 151,654
--------------------
Long-term debt 50,679 47,142
Deferred compensation 6,064 6,138
Shareholders' equity:
Common stock 234 234
Additional paid-in capital 12,123 12,123
Retained earnings 293,661 279,746
Accumulated other comprehensive income (loss) 8,228 (745)
Treasury stock at cost (36,066) (36,066)
--------------------
278,180 255,292
--------------------
$518,624 $460,226
====================
Cubic Corp.
Consolidated Condensed Statements of Income (Unaudited)
(amounts in thousands, except per share data)
Six Months Ended Three Months Ended
March 31, March 31,
2004 2003 2004 2003
------------------ ------------------
Sales $346,216 $315,513 $175,184 $167,157
Costs and expenses:
Cost of sales 269,912 250,074 134,865 133,703
Selling, general and
administrative expenses 49,611 41,380 26,080 20,971
Research and development 1,908 3,034 1,048 1,623
------------------ ------------------
321,431 294,488 161,993 156,297
------------------ ------------------
Operating income 24,785 21,025 13,191 10,860
Other income (expenses)
Gain on sale of real estate -- 6,190 (a) -- 6,190(a)
Interest expense (2,232) (1,869) (1,179) (998)
Other income 1,333 1,470 508 794
------------------ ------------------
Income before income taxes 23,886 26,816 12,520 16,846
Income taxes 8,100 8,900 4,200 5,600
------------------ ------------------
Net income $15,786 $17,916 $8,320 $11,246
================== ==================
Net income per share $0.59 $0.67 (a) $0.31 $0.42(a)
================== ==================
Dividends per common share $0.07 $0.07 $0.07 $0.07
================== ==================
Average shares of common
stock outstanding 26,720 26,720 26,720 26,720
================== ==================
(a) Excluding the real estate gain last year, 2003 EPS would have
been $.28 for the second quarter and $.53 for the first half.
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